Wall Street fecha semana sem rumo. Grandes tecnológicas pressionam

[Karamba]

Como já era de esperar, tanto a europa como o japão estão a começar a resistir à desvalorização do USD.
Devemos a partir de agora (espero), começar a assistir a fortes intervenções do BOJ e do BCE no forex. Será que funciona ? Parece-me difícil. Quando a estes dois se junta o FED (como aconteceu
quando o euro atingiu valores muito baixos), o mercado leva pancada da forte e acaba por inverter (os 3 juntos têm muita muita força). Só dois, não chega.

Um abraço ao Caldeirão.
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Resisting the Inevitable

Stephen Roach (New York)

The French have taken to the streets in protest of pension reforms. The politics of labor market reform are meeting great resistance in Germany. The Japanese have intervened in foreign exchange markets in an effort to stem the appreciation of the yen. And Washington seems to be doing everything in its power in order to boost a sluggish US economy. These actions all have one thing in common -- they reflect efforts to resist the increasingly powerful forces of global rebalancing. In the end, I think any such resistance is doomed to failure.

In many respects, the world seems perfectly content to stay the course of US-centric growth that has prevailed since the mid-1990s. After all, many believe that the global economy’s one-engine 747 could fly forever. But in this post-bubble era, that one engine is now sputtering. Moreover, gaping external imbalances suggest that such a recipe for global growth is unsustainable. Global rebalancing entails a significant shift in the mix of global growth -- away from US-led excess demand toward more support by domestic demand from Europe, Japan, and even the developing world. I never expected that this rebalancing would be a voluntary exercise. Instead, I have argued that it would more likely be sparked by pressure -- either by the distress of recession or by realignment of the world’s relative price structure brought about by a significant decline in the dollar.

Both of those pressures now appear to be playing out. Several weeks ago we lowered our 2003 baseline forecast of world GDP growth to 2.4% -- slightly below the official recession threshold of 2.5% (see my 7 April essay, “The Global Double Dip”). The unfolding of recent events has been broadly consistent with that forecast. The crowning blow has been the combined impacts of an apparent double-dip in Euroland and a SARS-related shortfall in Asia -- two regions that collectively account for about 42% of world GDP. In the context of anemic growth in the US and renewed stagnation in Japan, the impact of these shocks on an already weakened world economy is all the more acute. As a result, it now looks as if the global economy slipped back into recession in the spring of 2003 -- the second such downturn in the past three years. Painful as they are, recessions often serve a very useful purpose: They force economies to come to grips with cyclical imbalances and structural excesses. That has long been one of the key premises of global rebalancing.

The recent weakness of the dollar is sending a similar message. While the US currency has fallen sharply against the euro (off about 25% from its early 2002 peak) and to a lesser extent against the yen (down 14% from early 2002 levels), the decline against a broad basket of currencies has been more limited -- down 6% year-to-date and off only 9% from the early 2002 peak. The dollar’s correction, in my view, is a key ingredient of a classic current-account adjustment. Its limited decline on a broad trade-weighted basis tells me that this correction has only just begun. Currency depreciation is a lever that shifts pressure from one region to another. In the current instance, a weaker dollar has the potential to help arrest deflationary pressures in the United States at the cost of exporting similar pressures to America’s trading partners. Moreover, dollar depreciation could also be key in inhibiting excess consumption in the US and forcing foreign authorities to stimulate domestic demand.

The main problem with global rebalancing is that it does not sit well with the body politic around the world. The reason is obvious -- it’s a scenario that puts pressure on workers/ voters. For example, the last thing the American public seems to want is to rebuild national saving. After all, that would entail slower consumption growth -- a direct challenge to the excesses of consumerism that have now become so deeply ingrained in the American psyche. Never mind the saving imperatives of an aging generation of US baby boomers. I guess we’ll just have to cross that bridge when we come to it -- however painful the endgame will then be. Washington certainly seems to be playing to that sentiment -- moving inexorably down the path of additional fiscal and monetary stimulus. America’s authorities seem to be doing everything in their power to avoid the weaker consumption scenario that a saving-short US economy so desperately needs.

A similar response is evident in Europe and Japan, where the authorities are either unable or unwilling to embrace more expansionary fiscal and monetary policies and the politicians are facing stern opposition to structural reform initiatives. Discretion on counter-cyclical stabilization policies is limited either by the environment -- Japan’s zero-interest rates and fiscal excesses -- or by rules and outdated mandates -- Europe’s Growth and Stability Pact and the ECB’s inflation fixation in an increasingly deflationary world. That puts the onus squarely on policies of structural reform -- the heavy lifting that has the greatest payback in terms of unlocking longer-term efficiencies and boosting growth in domestic demand. Recent research by the staff of the IMF underscores the potential economic benefits of such initiatives (see Chapter IV in the IMF’s April 2003 World Economic Outlook, “Unemployment and Labor Market Institutions: Why Reforms Pay Off”). The IMF study finds that if Europe were to adopt US-style labor and product market conventions, potential GDP could be increased by as much as 10% over the longer haul.

Notwithstanding the beneficial long-term impacts of reforms, there is little political to incur the short-terms coats associated with these initiatives. Politicians who are willing to challenge deeply entrenched social contracts under the guise of dealing with these longer-term issues invariably run the very real risk of being repudiated at the polls. Which takes us to the dark side of this scenario -- the possibility of competitive currency devaluations aimed at short-circuiting the very process of global rebalancing. The Japanese are leading the way, with recent intervention in foreign exchange markets suggesting that the Ministry of Finance will make an effort to draw a “line in the sand” for yen/dollar at 115. Nor would I be surprised to see the European authorities opt for a similar gambit should the euro move into the 1.25 range against the dollar.

The possibility of competitive currency devaluations reveals a deep mistrust in the notion of a dollar-induced rebalancing of the global economy. With the European and Japanese economies in bad shape, the risk is that authorities in those countries believe that they, too, are deserving of the weaker currency. Never mind the lessons of history and economic theory, which tell us that the weaker currency always goes to the nation with the current account deficit problem -- in this case the United States. To the extent that Japan and eventually Europe can put a limit on currency realignment, the immediate imperatives of structural reform would then be lessened. And the politicians would then avoid the necessity to embrace reforms, thereby surviving to serve yet another term.

Despite the early stages of a dollar-sell-off, there are no guarantees that the world will come together in embracing the global rebalancing scenario. To the extent that nations resist the heavy lifting required either of stabilization policies or structural reform initiatives, the imbalances of a lopsided global economy can only intensify. That would make for an even nastier endgame.